GEI Working Paper Abstracts

Working papers produced by the research projects in the Global Economic Institutions Programme have begun to appear. They are available for £4/$8 each from: Subscriptions Officer, Centre for Economic Policy Research, 90-98 Goswell Road, London EC1V 7RR, UK.

Papers: [1-5] | [6-10] | [11-15] | [16-20] | [21-25] | [26-30] | [31-35] | [36-45] |

[46-47]

Working Paper No. 1

Two Statements on Commodity Price Risk Management
Ronald C Duncan and Christopher L Gilbert

International commodity agreements are now part of history, but commodity price and revenue risk remain. The focus of international commodity policy has therefore been redirected at risk management. Duncan and Gilbert argue, however, that it needs to be appreciated that the benefits of commodity price risk management using futures and options come neither through risk reduction, nor through income smoothing. These benefits facilitate more effective planning and also enhance creditworthiness both for commodity producers and for governments. But effective risk management is intimately linked with access to credit, and here sovereign risk problems constitute a major obstacle. The authors conclude by suggesting that international institutions (in particular the World Bank and the IMF) might help to overcome this problem by assuming a larger role in underwriting sovereign risk.

Working Paper No. 2

International Commodity Agreements: An Obituary Notice
Christopher L Gilbert

It is widely believed that International Commodity Agreements have lapsed because they have failed. But Gilbert argues that the reality is more complex. The tin agreement did collapse. But in the cases of sugar and cocoa adverse market conditions and lack of general support made stabilization impractical. And control of the coffee market ceased largely because of disagreements both between and within the producing countries on the division of the benefits resulting from higher prices. Overall, argues Gilbert, commodity control fits uneasily in an increasingly globalized and competitive world, and this perception has resulted in a diminished willingness to resolve the practical difficulties of price stabilization.

Working Paper No. 3

The Macroeconomics of the Mexican Crisis: A Simple Two-Period Model
Gregor Irwin and David Vines

Irwin and Vines analyse the events leading to the devaluation of the Mexican peso last year using a simple two-period model. They view the problem as a race between a foreign investment led demand boom and the potential expansion in supply which might follow; the outcome of such a race is inherently uncertain. If, in an exchange rate based stabilization programme, supply does not keep pace with demand, competitiveness problems will eventually result in lower output, and these might force a government concerned with its political prospects, to devalue. In Mexico it would also appear that the costs and benefits of maintaining the regime were adversely affected by a reduction in the amount of external financing available.

Working Paper No. 4

The Trade and Standards Debate: Overburdening or Defending the Multilateral System?
Stephen Woolcock

Increased international economic interdependence has resulted in pressure for labour standards to be added to the 'new commercial agenda'. This paper addresses the question of whether the addition of labour standards would overburden or strengthen the multilateral system? If there can be multilateral agreements on standards and enforcement of intellectual property rights, is it possible to keep standards off the agenda? This study suggests that it is the relative strength of competing interests which will determine whether labour standards reaches and is maintained on the international trade agenda. 'Objective' economic criteria on the impact of labour standards on trade or legal criteria for delineating between national, 'regional' and multilateral competencies in this area are unlikely to have much effect. The paper argues that there is not sufficient political support for the inclusion of trade and labour standards on the agenda for the World Trade Organization (WTO), but that the issue will not 'go away'. Work should therefore continue on defining core labour standards and in reaching a consensus on how they should be enforced.

Working Paper No. 5

Crash! Expectational Aspects of the UK's and the USA's Departures from the Inter-war Gold Standard
C Paul Hallwood, Ronald MacDonald, Ian W Marsh

This paper contains an investigation of the pressures on the UK and the USA to devalue their currencies against gold, respectively, in 1931 and 1933. We derive time-series of realignment expectations for the pound and the dollar. Amongst our findings are that expectations are quite well explained by fundamental economic variables. The implication is drawn that macroeconomic events, some of them directly or indirectly under the influence of the authorities, were in part responsible for jolting the UK and the USA off the gold standard.